Recommended Mutual Funds for 2016 iFAST Research

Our Recommended Funds

Author: Dr. Renu Pothen, Research Head, iFAST Financial India Pvt. Ltd.
CATEGORIES

LARGE CAP

RECOMMENDED FUNDS FOR 2015

RECOMMENDED FUNDS FOR 2016

EQUITY FUNDS

ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND

ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND

BIRLA SUN LIFE FRONTLINE EQUITY FUND

BIRLA SUN LIFE FRONTLINE EQUITY FUND

RELIANCE TOP 200 FUND

RELIANCE TOP 200 FUND

AXIS EQUITY FUND

AXIS EQUITY FUND

CANARA ROBECO EQUITY DIVERSIFIED

SBI BLUE CHIP FUND

NA

BNP PARIBAS EQUITY FUND

MIRAE ASSET EMERGING BLUECHIP FUND

MIRAE ASSET EMERGING BLUECHIP FUND

CANARA ROBECO EMERGING EQUITIES

CANARA ROBECO EMERGING EQUITIES

HDFC MID-CAP OPPORTUNITIES FUND

SBI MAGNUM MIDCAP FUND

NA

BNP PARIBAS MIDCAP FUND

NA

TATA MID CAP GROWTH FUND

RELIANCE SMALL CAP FUND

RELIANCE SMALL CAP FUND

DSP BLACKROCK MICRO CAP FUND

DSP BLACKROCK MICRO CAP FUND

RELIANCE EQUITY OPPORTUNITIES FUND

RELIANCE EQUITY OPPORTUNITIES FUND

IDFC PREMIER EQUITY FUND

IDFC PREMIER EQUITY FUND

KOTAK SELECT FOCUS FUND

KOTAK SELECT FOCUS FUND

FRANKLIN INDIA PRIMA PLUS

FRANKLIN INDIA PRIMA PLUS

MIRAE ASSET INDIA OPPORTUNITIES FUND

SBI EMERGING BUSINESSES FUND

NA

ICICI PRUDENTIAL VALUE DISCOVERY FUND

VALUE

ICICI PRUDENTIAL VALUE DISCOVERY FUND

L&T INDIA VALUE FUND

DIVIDEND YIELD

TATA DIVIDEND YIELD FUND

TATA DIVIDEND YIELD FUND

FRANKLIN INDIA TAXSHIELD

FRANKLIN INDIA TAXSHIELD

AXIS LONG TERM EQUITY FUND

AXIS LONG TERM EQUITY FUND

ICICI PRUDENTIAL TAX PLAN

ICICI PRUDENTIAL LONG TERM EQUITY FUND (TAX SAVING)

RELIANCE TAX SAVER (ELSS) FUND

RELIANCE TAX SAVER (ELSS) FUND

CANARA ROBECO EQUITY TAX SAVER

TATA INDIA TAX SAVINGS FUND

NA

BNP PARIBAS LONG TERM EQUITY FUND

JPMORGAN GREATER CHINA EQUITY OFF-SHORE

FUND

JPMORGAN GREATER CHINA EQUITY OFF-SHORE FUND

L&T GLOBAL REAL ASSETS FUND

FRANKLIN INDIA FEEDER - FRANKLIN U.S. OPPORTUNITIES

FUND

BANKING

ICICI PRUDENTIAL BANKING & FINANCIAL SERVICES

FUND

ICICI PRUDENTIAL BANKING & FINANCIAL SERVICES FUND

PHARMACEUTICALS

SBI PHARMA FUND

SBI PHARMA FUND

CANARA ROBECO INFRASTRUCTURE

CANARA ROBECO INFRASTRUCTURE

NA

KOTAK INFRASTRUCTURE & ECONOMIC REFORM FUND

FMCG

SBI FMCG FUND

SBI FMCG FUND

TECHNOLOGY

ICICI PRUDENTIAL TECHNOLOGY FUND

ICICI PRUDENTIAL TECHNOLOGY FUND

MID CAP

SMALL CAP

MULTI CAP

ELSS

GLOBAL

INFRASTRUCTURE

Recommended Mutual Funds for 2016 iFAST Research

DEBT FUNDS

SHORT TERM

DYNAMIC BOND
DUND

INCOME

GILT-LONG TERM
CORPORATE BOND
FUND

FRANKLIN INDIA SHORT TERM INCOME PLAN

FRANKLIN INDIA SHORT TERM INCOME PLAN

UTI SHORT TERM INCOME FUND

UTI SHORT TERM INCOME FUND

BIRLA SUN LIFE SHORT TERM OPPORTUNITIES FUND

BIRLA SUN LIFE SHORT TERM OPPORTUNITIES FUND

SUNDARAM SELECT DEBT SHORT TERM ASSET PLAN

DSP BLACKROCK INCOME OPPORTUNITIES FUND

RELIANCE REGULAR SAVINGS FUND - DEBT OPTION

NA

BIRLA SUN LIFE DYNAMIC BOND FUND

BIRLA SUN LIFE DYNAMIC BOND FUND

UTI DYNAMIC BOND FUND

UTI DYNAMIC BOND FUND

TATA DYNAMIC BOND FUND

TATA DYNAMIC BOND FUND

RELIANCE DYNAMIC BOND FUND

DSP BLACKROCK STRATEGIC BOND FUND

FRANKLIN INDIA INCOME BUILDER ACCOUNT

FRANKLIN INDIA INCOME BUILDER ACCOUNT

ICICI PRUDENTIAL LONG TERM PLAN

ICICI PRUDENTIAL LONG TERM PLAN

UTI BOND FUND

AXIS INCOME FUND

CANARA ROBECO INCOME

TATA INCOME FUND

IDFC GOVERNMENT SECURITIES FUND - INVESTMENT

PLAN

IDFC GOVERNMENT SECURITIES FUND - INVESTMENT

PLAN

SBI MAGNUM GILT FUND - LONG TERM PLAN

SBI MAGNUM GILT FUND - LONG TERM PLAN

SBI CORPORATE BOND FUND

SBI CORPORATE BOND FUND

HYBRID FUNDS
BALANCED

MIP

ICICI PRUDENTIAL BALANCED FUND

ICICI PRUDENTIAL BALANCED FUND

HDFC BALANCED FUND

HDFC BALANCED FUND

TATA BALANCED FUND

TATA BALANCED FUND

CANARA ROBECO MONTHLY INCOME PLAN

CANARA ROBECO MONTHLY INCOME PLAN

ICICI PRUDENTIAL MIP 25

ICICI PRUDENTIAL MIP 25

NEW ENTRANTS

REPLACEMENTS

We started publishing our list of Recommended Funds for the first time in June 2009 and this is our
tenth edition of the list. In the initial 2 years, we used to release our Recommended Funds twice in a
year however since 2011 we have been following a yearly schedule. We broke the new tradition only
once in 2013, when we did a half yearly review of our recommended funds on account of the huge
volatility witnessed in both the equities and debt markets.
As I write this note, our markets are struggling to stay afloat on account of both global uncertainties
and domestic worries. The Modi wave seems to have vanished and investors are again left in the
lurch wondering if they should ignore the market signals and invest or stay away completely from
this volatility. The answer for this can be found in our recently published report, Market Trends and
Outlook 2016. The report is on the following lines:
We believe that the biggest USP for the Indian markets is the combination of a government that is
taking incremental steps which will lead to a complete overhaul of the economy in the coming years
and a pro-active Central Bank whose priority is to reduce inflation without compromising on growth.
The Government and the Reserve Bank of India (RBI) are taking measures to clean up the mess in

Recommended Mutual Funds for 2016 iFAST Research

PSU banks, which is one of the major issues that India is facing today. This along with the improving
macro-economic fundamentals and the attractive valuations should give the confidence to our
investors in taking exposure into the markets. This is a better alternative than waiting on the
sidelines for an appropriate opportunity to enter the markets.
Now coming to our Recommended Funds for 2016, we have 55 funds with 35 of them being in the
equity category, while the debt and hybrid segments have 15 funds and 5 funds respectively. In
the current list, 15 of the funds are new entrants, among which some of them are replacements. The
others have been added in the respective categories on account of them clearing all the filters in the
model with flying colors.
Our biggest exit this year has been Mirae Asset India Opportunities Fund, our best bet in the multi
cap space since 2012. We are of the view that the fund is going through a short term blip and it is
only a matter of time before the same bounces back into our list. We continue to maintain our
confidence in the conviction of the fund management team and the investment strategy being
followed while picking stocks for the portfolio. Hence, we advise our existing investors to continue
with their investments into this fund via the SIP and the lump sum routes. Neelesh Surana who
manages this fund had the following to say on hearing about the removal of our favored multi cap
fund after being a part of our list for 4 years in a row.
Our portfolio strategy is to invest in quality businesses, run by competent management and hold
them over an extended period. We are positive on the entire consumption related businesses which
include: retail private banks, autos, media, FMCG, and other discretionary businesses. We have been
focusing on cash generating businesses, and thus have had relatively lower weight to construction,
infra names. We remain fully invested and dont take cash calls, as we believe asset allocation
decision is made mutually by the distributor and his client. MAIOF has about 25% weight in midcaps
as we are positive on these companies from long term perspective. At an overall level, we endeavor
to create a portfolio which can generate better risk adjusted returns in the long-term.
We had 2 surprise entrants in the large cap and mid cap categories and these belonged to SBI
Mutual Fund and BNP Paribas Mutual Fund.
It seems that Sohini Andani, the Fund Manager from SBI Mutual Fund, is leaving no stone unturned
to make sure that both her funds, i.e. SBI Blue Chip Fund and SBI Magnum Midcap Fund are the
star performers in their respective categories. In an industry that is the bastion of male dominated
fund management teams, Ms. Andanis remarkable success skillfully cuts across the gender
stereotype to show us that the art of stock picking will be a level playing field for all. Quiz Andani
on the reasons for her success and pat comes the reply, (1) Good Stock Selection, (2) Strong
Research Team and (3) Capital Preservation.
Although all the 4 equity funds from BNP Paribas Mutual Fund had cleared the filters in our model
to be the top performers in their respective categories, only 3 funds i.e. BNP Paribas Equity Fund,
BNP Paribas Long Term Equity Fund and BNP Paribas Midcap Fund are a part of our current
recommended funds list. However, we decided to continue with our existing fund in the dividend
yield category that is Tata Dividend Yield Fund on account of our internal mandate to include only 1
fund in this category. This is a clear indication that a fund house with limited number of funds and a
passionate fund management team can create value for investors in the long term.
SBI Emerging Businesses Fund is back with a bang. The fund was one of our biggest bets in the mid
cap category and later classified as a multi cap fund in 2015. When we removed this fund from our

Recommended Mutual Funds for 2016 iFAST Research

list last year, our views were on these lines. We continue to have faith in the stock picking ability of
Srinivasan and would advise our existing investors not to press the panic button yet.
In addition to this, in our last years note, we had also written that the next big mid cap bet from the
SBI stable would be SBI Small and Midcap Fund. However, this fund did not even make it to our
sample this year since it has been closed for fresh subscription due to the capacity constraint of INR
750 crore as per the SID. At this juncture, we would like to inform our investors that this fund was
the best performing mid cap fund on our platform in 2015.
Kotak Infrastructure & Economic Reform Fund (erstwhile PineBridge Infrastructure & Economic
Reform Fund) has been our favorite pick in the infrastructure space since 2012. In our last years list,
this fund was not considered during the working of our model as the details of the merger were not
clear. This fund is back in our list this year and continues to clear all the filters in our model. The fund
continues to be a true to label infrastructure fund and the fresh thought process brought into the
fund by Harish Krishnan and team should hold the fund in good stead in the long run.
ICICI Prudential Value Discovery Fund, our best pick in the value space since 2010 has been moved
into the multi cap category. We thought that a value fund with a mandate to invest into a diversified
portfolio would be an ideal fit in the multi cap segment. The change in the benchmark of this fund
from CNX Midcap Index to S&P BSE 500 Index also supports our thought process. An interesting
observation is that whether the fund is categorized as a value fund or a multi cap fund, it tends to
clear all the filters in our model and has been a part of our recommended funds list for nine times
in a row.
IDFC Premier Equity Fund became a part of our Recommended Fund list for the first time in 2014
and the reason for the entry given was on these lines. The fund always used to be the top performer
in whichever categories it was placed. However, we could not make it a part of our earlier
recommended lists on account of its mandate that it will not accept lump sum investments. Though
the mandate remains the same, we have decided to give thumbs up to this fund and hence Kenneths
biggest bet makes an entry into our recommended funds list for the first time. Since we heard about
Kenneths decision to move out from the fund house in mid 2015, we had asked our existing
investors to continue with their SIP investments. However, as for fresh investments, we decided to
adopt a wait and watch policy till we could get some clarity on how the fund house managed this
transition. Now, with the appointment of Anoop Bhaskar as the Head of Equities, we can safely
recommend fresh exposures into this fund. We are of the view that Bhaskar, a fund manager with a
strong conviction in his stock picks will be able to steer this fund in the right direction. If Kenneth
was known to be a mid-cap mogul, then Bhaskars expertise lies in managing funds across the
market capitalization spectrum. This means that it is only a matter of time before the funds from
IDFC Mutual Fund across categories will find a place in the iFAST Recommended Funds list.
As far as the fund houses are concerned, ICICI Prudential Mutual Fund refuses to give up the first
position and continues to rule the roost with 8 funds.
SBI Mutual Fund is back in the race to get back its second position which it had lost to Canara
Robeco Mutual Fund and Reliance Mutual Fund last year. Team Srinivasan is making sure that the
funds from a fund house belonging to a parent, which is the easiest recall for any lay person in India
finds a place in the equity portfolios of investors.

Recommended Mutual Funds for 2016 iFAST Research

Tata Mutual Fund is on the third spot and an interesting fact about this entry is that all the funds
selected from this stable are the best performers during the different risk periods considered by
us. At this juncture, we would like to bring the notice of our investors to Tata Ethical Fund which is
shariah compliant by nature and has been classified by us as a multi cap fund in the current year on
account of it having no market cap/sector bias. The fund turned out to be one of the best
performers in the multi cap segment. However, this could not make it to the final list as there were
already 4 existing funds and 2 new entrants which had to be incorporated in the current list. We
continue to maintain a positive stance on this fund and just like in our June 2014 note to investors,
we recommend the same to those who wish to invest in socially responsible companies having a
consistent performance. Ritesh Jain continues to prove his expertise as a proficient CIO in his
current assignment as well, with 6 funds making it to our list this year. Jain had the following
words to tell us when we informed him of the inclusion of the funds from this mutual fund.
We attribute our equity performance to our investment philosophy of buying quality businesses at
reasonable valuations instead of chasing market momentum. Our management of debt portfolios is
guided by SLR philosophy - where S stands for Safety of the Portfolio, L for adequate Liquidity in
the Portfolio, and R providing optimum risk adjusted Returns, essentially in that order. We believe
that investment success over a period of time is achieved through superior risk adjusted performance
facilitated by rigorous debt investment process guided by SLR attributes.
Although Axis Mutual Fund is known as one of the best performing equity mutual fund houses, our
current list includes a new entrant - a fixed income fund from the Axis stable (Axis Income Fund).
This goes to prove that R.Sivakumar is taking all the necessary steps to ensure that the funds from
this segment also become a part of investors portfolio.
Today when we talk about the ELSS category, the first recall that comes to an investors mind is
Axis Long Term Equity Fund. There is no stopping Gopani and his eye for detail when it comes to
picking stocks which have led to the consistent performance of this fund over a period of time. As
we write this note, this is the largest tax saving fund in the industry with a corpus of INR 6886 crore
as on January 2016. Gopani continues to keep a low profile despite the huge success of his fund and
he answers his investors in the simplest form when asked for the mantra behind his success.
Our investment Process is tailored to buy and hold strong, secular businesses. We have been
bottom-up stock pickers of companies with sound business models, pricing power, quality
management, which have consistently created long term wealth for Shareholders. In this dynamic
market, we remain confident about our investment process and hence our performance trajectory.
Kotak Mutual Fund is slowly gaining traction in our recommended Funds list with Kotak Select Focus
Fund continuing its good innings in the multi cap segment this year as well. We had assured our
investors last year that with Harsha Upadhyaya heading the equity space in the fund house, the
equity funds are in proficient hands. The inclusion of Kotak Infrastructure & Economic Reform Fund
and the movement of Kotak 50 from the 25th rank in our last years list to the 10th rank in the
current list goes to prove that Team Upadhyaya is all set to be a part of our Recommended Funds
list in the coming years.
We have started 2016 on a very bad note and each day is proving to be painful for the markets.
The slowing down of the Dragon and every comment from Janet Yellen continues to spook our
markets. If this was not enough, Dr. Rajan seems to be serious about doing a Swachh Bank
Campaign with a diktat to banks to clean up their books by 2017. This is sending tremors among
the market participants. We would advise our investors not to press the panic button but let the
Governor do the deep surgery on banks, so that they become healthy enough to start lending to

Recommended Mutual Funds for 2016 iFAST Research

the infrastructure sector which is essential for the complete revival of the economy. We agree
with the discussion going on in the street that the Government has not transformed the country
into a Vibrant India in the last 1.5 years. However, the incremental steps being taken in crucial
sectors like Roads, Railways, Power, Banking, etc. should give confidence to our investors that it is
not just some plain talk by Team Modi to impress global investors but this Government means
business.
Pro-Reform Government + Pro-Active Central Bank + Improving Macro-Economic Fundamentals +
Attractive Valuations = India
We expect 2016 to be volatile and our advice as usual remains the same.
Stay calm while the markets go aslant and the very same market will reward you for your
patience.
Happy Investing!!

DISCLAIMER: THIS REPORT IS NOT TO BE CONSTRUED AS AN OFFER OR SOLICITATION FOR THE SUBSCRIPTION,
PURCHASE OR SALE OF ANY MUTUAL FUND. ANY ADVICE HEREIN IS MADE ON A GENERAL BASIS AND DOES NOT TAKE
INTO ACCOUNT THE SPECIFIC INVESTMENT OBJECTIVE OF THE SPECIFIC PERSON OR GROUP OF PERSONS. PAST
PERFORMANCE AND ANY FORECAST IS NOT NECESSARILY INDICATIVE OF THE FUTURE OR LIKE PERFORMANCE OF THE
MUTUAL FUND. THE VALUE OF UNITS AND THE INCOME FROM THEM MAY FALL AS WELL AS RISE. OPINIONS EXPRESSED
HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

Recommended Mutual Funds for 2016 iFAST Research